Hang Seng fell 0.4%
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This week, the Hang Seng Index fell by 0.4%, while the Hang Seng Tech Index declined by 0.2%, showing a pattern of early decline followed by a rebound. The market opened with a gap down on Monday, weighed down by weak domestic August CPI and PPI data, as well as disappointing U.S. nonfarm payroll figures for August. However, sentiment improved later in the week, supported by the release of U.S. August CPI data, signs of easing China-Europe relations, and strength in U.S.-China tech stocks, leading to a rebound on Thursday and Friday. Additionally, the Hong Kong Stock Connect adjusted its list of eligible stocks, adding BABA-W (09988), QUANTUMPH-P (02228), and Laopu Gold (06181), among others. Meanwhile, export data from China’s General Administration of Customs exceeded market expectations, and the State Council’s new guidelines for high-quality development in the insurance industry provided a policy boost to sectors such as insurance, innovative pharmaceuticals, and medical devices.
In the U.S. stock markets, as of Thursday, the S&P 500 index rose 3.5%, while the NASDAQ Composite gained 5.3%, with both indices reclaiming their 50-DMA. Meanwhile, the Dow Jones Industrial Average increased by 1.9%. On the macroeconomic front, data from the U.S. BLS (Bureau of Labor Statistics) indicated that nonfarm payrolls increased by 142,000 in August, falling short of expectations. July’s figure was revised sharply down to 89,000, and June’s was adjusted down by 61,000. The unemployment rate dropped to 4.2%, in line with forecasts, marking its first decline since March. Inflation metrics showed that August’s CPI rose 2.5% y/y, meeting projections but slowing notably from the previous month, marking the fifth consecutive month of deceleration and reaching its lowest level since February 2021. m/m, CPI increased by 0.2%, in line with forecasts and the previous reading. Core CPI, rose 3.2% y/y, matching both expectations and the prior month’s data. m/m, core CPI increased by 0.3%, slightly exceeding expectations and marking the largest monthly gain in four months. For the PPI, August saw a 1.7% y/y increase, aligning with expectations and reaching the lowest level since February. m/m, PPI advanced by 0.2%, surpassing expectations. July’s PPI was revised down to 2.1%, indicating further signs of easing inflationary pressure. Core PPI, rose 2.4% y/y, meeting expectations and exceeding the previous month’s figure; m/m, it increased by 0.3%, above forecasts. In the labor market, data from the BLS showed that initial jobless claims for the week ending September 7 totaled 230,000, higher than both forecasts and the prior week’s number, marking the first increase in three weeks. Continuing claims for the week ending August 31 edged up to 1.85 million. Next Tuesday and Wednesday (September 17-18), the Federal Reserve will hold its sixth monetary policy meeting of the year, during which it will announce its latest interest rate decision and economic outlook. This event is highly anticipated by the markets.
The CSI 300 fell 2.2% this week on volume below the average and lower than the last week. The market condition was Downtrend. The index gapped lower on Monday. It closed at the week’s low of 3159 on Friday, near the Feb. 2 low of 3108. August CPI rose 0.6% y/y, higher than the previous value but lower than expected. Affected by the lack of market demand and the downward trend of some international commodity prices and other factors, the PPI fell 1.8% y/y, down more than the previous value of 0.8% and the expected value of 1.4%.PPI fell by 0.7% m/m. August exports rose 8.7% y/y, higher than the previous value and the expected value. Imports rose 0.5% y/y, well below the previous value and expectations. U.S. CPI rose 2.5% y/y in August, lower than the previous reading. The y/y increase has narrowed for the fifth consecutive month and is at its lowest level since February 2021. Core CPI rose 3.2% y/y, unchanged from the previous month. It rose 0.3% m/m, above the previous reading. Core inflation continues to rise, causing investors to temper expectations of aggressive rate cuts. PPI rose 1.7% y/y in August, lower than prior. It rose 0.2% m/m, above the previous value. Core PPI rose 2.4% in August, unchanged from the previous value. It rose 0.3% m/m, above the previous value. With the Mid-Autumn Festival holiday approaching, investors are advised to make good financial arrangements. The daily northbound inflow/outflow data from August 19th onwards will not be published.
Leading stocks fell this week. The average stock in the MarketSmith Hong Kong 33 fell by 0.8% for this week. Our Hong Kong Model Portfolio rose by 0.3% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 513.2% vs. a 14.9% down for the Hang Seng.
The best performer in our Hong Kong 33 was KINETIC DEV(01277), it’s a comprehensive coal producer and operator in China. The stock gained 13.3% this week. EPS rating stands at 99, RS rating of 98, and A/D rating of A-.
Our Hong Kong Market Status are on an Uptrend Under Pressure.
From a technical analysis perspective, the Hang Seng Index broke below the 200-DMA on Wednesday but quickly regained it the next trading day, indicating strong support at this level. However, on Friday, the index faced resistance as it attempted to break above the 50-DMA and ultimately failed to close above it. Regarding Southbound flows, the trend of inflows continued this week, with a total net inflow of HKD 11.467 billion. Overall, the Hang Seng Index may continue to face some short-term pressure. In particular, the upcoming Federal Reserve interest rate decision next week could trigger significant market volatility, which may greatly impact the future trajectory of Hong Kong stocks. Given the current uncertainties in the market, investors are advised to remain calm and rational, avoid blindly following trends, and focus on stocks with stronger-than-expected earnings and robust technical performance.
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Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.
published on September 13, 2024